Dollar Limits on Compensation and Benefits Announced

Blog
November 6, 2019

The Internal Revenue Service has announced the 2020 cost-of-living adjustments for various limits affecting employee benefit plans. The more common limits for 2020 and how these numbers compare to 2019 is shown below:

2020 2019
401(k) & 403(b) Elective Deferrals $19,500 $19,000
Catch-Up Contribution for participants age 50 and over $6,500 $6,000
Defined Contribution Plans-IRC 415 (Including SEP and Keogh Plans) $57,000 $56,000
Maximum Benefit for Defined Benefit Plans

Note: This is not the maximum contribution, it is the maximum benefit that can be funded.

$230,000 $225,000
SIMPLE Retirement Plans
Elective Deferrals $13,500 $13,000
Catch-Up Contribution for participants age 50 and over $3,000 $3,000
Maximum Annual Compensation for Determining Contributions and Benefits $285,000 $280,000
Compensation Limit for Key Employee Determination $185,000 $180,000
Compensation Limit for Highly Compensated Determination $123,000 $125,000
IRA Contributions $6,000 $6,000
IRA Catch-Up Contribution $1,000 $1,000

A detailed listing of all of the adjusted limitations can be found here.

For questions or learn more about how these limits apply to you, please contact Mark Flanagan of Aronson’s Compensation and Benefits Practice at 301.231.6257.